A burst of financings for mergers and acquisitions fueled a 19% gain in leveraged syndicated lending in the third quarter, to $90.2 billion.

Total syndicated lending rose only 8% from the year-earlier period, to $262 billion. But the good showing in leveraged lending -- the most profitable line of loans -- signaled that the bank market's phenomenal growth is continuing, bankers said.

"It's the strongest third quarter ever for the loan market overall. The summer is usually slower," said Peter Gleysteen, a managing director and group head of global syndicated finance at Chase Manhattan Corp.

"One reason is that the deal business is seasonal and it shuts down in August," Mr. Gleysteen said. "In the past we've counseled issuers not to take new deals to market in late July and August. But this year, we had three bank meetings in the three days after Labor Day."

Year-to-date leveraged lending, at $258 billion, is 13.8% ahead of last year. Total lending has declined 0.6% to $749.4 billion as borrowers, discouraged by higher interest rates, continue to shun refinancing.

Deal totals through Sept. 30 also lag last year by about 10%. Through that date lenders had put together 1,949 loan packages, compared with 2,156 in the first nine months of 1998.

In the latest quarter Chase continued to lead the leveraged lending sector on a dollar volume basis with 66 packages worth $25.1 billion. That included a whopping $9.5 billion deal for Allied Waste Industries Inc.'s buyout of Browning-Ferris Industries Inc., the biggest leveraged loan since Kohlberg Kravis Roberts & Co.'s buyout of RJR Nabisco in 1988.

The Allied Waste deal "shows the unprecedented liquidity in the global loan market at levels that were never even considered before let alone done," Mr. Gleysteen said.

The Allied Waste loan helped increase Chase's leading market share to 27.8%, up nearly 50% from last year. But the company continues to come under pressure from Bank of America Corp., which also had a strong quarter. The Charlotte, N.C.-based banking company syndicated 100 leveraged loans valued at $21.4 billion -- a 23.7% share, according to Thomson Financial Securities Data Co., which compiles the statistics.

In fact, without the Allied Waste deal Chase would have finished second to Bank of America.

A wide gulf separates the top two lenders from their competitors. Citigroup Inc. ranks third with only 15 leveraged loans valued at $6.6 billion. Lehman Brothers followed with $3.79 billion worth of syndications in 13 loan packages.

Chris Ryan, head of Lehman's sales and distribution team, credited its surge to two deals: a $500 million loan to Blount International Inc. and a $1 billion loan to Prison Realty Trust Inc. As with Lehman's prior successes, those deals were spurred by tapping the investment bank's existing relationships.

"We're particularly proud of them because they were in the teeth of a tough market and were a lot of work," Mr. Ryan said.

The healthy quarters reported by Lehman, Credit Suisse First Boston and Goldman, Sachs & Co. contrasted to sharp declines for some established banking companies. J.P. Morgan & Co. syndicated only $1.28 billion in the quarter, an 86% decline from a year earlier. Deutsche Bank AG, which bought Bankers Trust Corp. during the year, syndicated $3.1 billion in leveraged loans. That amount is less than half the dollar volume it managed on a pro forma basis a year earlier.

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